Eagle Ford's Production Uptick // ChinaPetrol Sees 68% Net Leap // Iran's Oil Exports Surge
Eagle Ford's Production Uptick
Oil production in the Eagle Ford shale field in South Texas is expected to increase by 4% this year as higher prices and record American crude exports encourage more drilling.
"Output in the Eagle Ford shale field tanked in 2020, but has returned to growth with an average increase per month of about 17,000 barrels per bay (bpd) in the back half of 2022, according to U.S. government data. Its gains will help keep U.S. output rising as the Permian basin, the largest U.S. shale field, has slowed rapidly in the last year," reports Reuters.
The number of rigs drilling for oil in the Eagle Ford has risen to 69, the highest since March 2019. The Eagle Ford also sits near existing and proposed liquefied natural gas terminals, offering producers more buyers for their gas.
Regardless, the Eagle Ford has been a more fragmented oil and gas region, with greater ownership in the hands of private operators than public companies.
"(Mergers and acquisitions) have been fairly muted and remains fairly fragmented, but we're starting to see that shift just a little bit," Andrew Dittmar, director at Enverus Intelligence Research told Reuters. According to Dittmar, publicly-traded companies usually deploy fewer rigs than private ones.
PetroChina Sees 68% Net Leap
China's oil giant said that its preliminary net income from last year saw a huge jump.
"PetroChina Co., China’s top oil and natural gas driller, said preliminary net income for 2022 rose as much as 68% from the previous year. State-owned China National Offshore Oil Corp (Cnooc) said preliminary net income roughly doubled," reports Bloomberg. "Fossil fuel production in China soared in 2022, with coal and gas hitting record highs, as environmental targets took a back seat to energy security after a tumultuous year for prices."
Russia's invasion of Ukraine has scrambled energy markets, lifting prices and draining supply. China's state-owned oil and gas producers have benefited from the resultant higher prices overseas, despite weak demand in China caused by Covid lockdowns.
Last fall, China's top oil companies forecasted that fuel demand in the country would rebound in the last quarter of the year, thanks to government stimulus and an improving economy. This was expected to positively impact the performance of their large oil refining divisions. Thus, potential remains for dividend growth which could support the share price of Cnooc in the near term.
Iran's Oil Exports Surge
Everyone's been looking at Russia, but Iran, another sanctioned nation, has seen its oil output and exports boom.
"The timing couldn’t be better for the regime in Tehran, in need of cash after months of street protests," writes Javier Blas. "From the most recent low point, set in mid-2020, Iranian oil output has surged 40% despite Washington and Tehran failing last year to reach a new nuclear deal."
Since Biden walked away from the Iranian nuclear deal, America hasn't replaced its economic vice grip on Iran, though US Treasury maintains sanctions on some entities with regards to Iranian black-market oil sales. Blas suggests two reasons for the White House's blind eye: it's either unwilling or unable to enforce its sanctions, or it's more concerned with inflation.
Iran's production rose to 2.7 million barrels per day in December 2022, compared to 1.9 million barrels per day in July 2020. The increase has generated nearly $55 million a day or $1.6 billion a month for Iran. Research firm Vortexa Ltd. estimates that the country's total oil sales in December 2022 were 1.4 million barrels per day, the highest in over three years. China buys the lion's share of Iranian oil and often claims its origin is Malaysia.
Still, Irania output and export sits below the 3.8 million barrels per day of 2017-2018 after Tehran inked a nuclear deal with the West and economic sanctions were lifted. Trump reimposed these sanctions in 2018 and 2019, targeting oil sales.
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